Correlation Between Thor Industries and Foot Locker
Can any of the company-specific risk be diversified away by investing in both Thor Industries and Foot Locker at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Thor Industries and Foot Locker into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thor Industries and Foot Locker, you can compare the effects of market volatilities on Thor Industries and Foot Locker and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Thor Industries with a short position of Foot Locker. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thor Industries and Foot Locker.
Diversification Opportunities for Thor Industries and Foot Locker
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Thor and Foot is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Thor Industries and Foot Locker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foot Locker and Thor Industries is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Thor Industries are associated (or correlated) with Foot Locker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foot Locker has no effect on the direction of Thor Industries i.e., Thor Industries and Foot Locker go up and down completely randomly.
Pair Corralation between Thor Industries and Foot Locker
Considering the 90-day investment horizon Thor Industries is expected to under-perform the Foot Locker. But the stock apears to be less risky and, when comparing its historical volatility, Thor Industries is 1.38 times less risky than Foot Locker. The stock trades about -0.32 of its potential returns per unit of risk. The Foot Locker is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest 2,189 in Foot Locker on October 12, 2024 and sell it today you would lose (133.00) from holding Foot Locker or give up 6.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thor Industries vs. Foot Locker
Performance |
| Timeline |
| Thor Industries |
| Foot Locker |
Thor Industries and Foot Locker Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thor Industries and Foot Locker
The main advantage of trading using opposite Thor Industries and Foot Locker positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thor Industries position performs unexpectedly, Foot Locker can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Foot Locker will offset losses from the drop in Foot Locker's long position.| Thor Industries vs. Marine Products | Thor Industries vs. Malibu Boats | Thor Industries vs. Brunswick | Thor Industries vs. LCI Industries |
| Foot Locker vs. Abercrombie Fitch | Foot Locker vs. Urban Outfitters | Foot Locker vs. Childrens Place | Foot Locker vs. American Eagle Outfitters |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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